Page 55 - State-of-the-Industry-2013

Part 2 - mOBile inSuranCe, Credit and SavinGS

Mobile insurance

the opportunity for mobile insurance

insurance is defned as an arrangement by which a company or the state undertakes to provide a guarantee of compensation for speci-
fed loss, damage, illness, or death in return for payment of a specifed premium.

much of the world takes insurance for granted, but traditional insurance does not cater to those with low incomes in either developed or
developing nations. this is primarily because the cost of selling, underwriting, collecting premium payments and administering a claim
does not decrease in proportion to the value of the policy. therefore an opportunity may exist to leverage mobile technology to provide
insurance more cost efectively.

however, low-income individuals are not always familiar with insurance and providers must invest heavily in customer education to explain
the features and benefts of an insurance policy. a well-known saying in the insurance industry is “insurance is sold, not bought.” these
customer education eforts can be expensive and further complicate the business case for bringing insurance to those with low-incomes.

the mobile insurance landscape

Mobile insurance has had a number of false starts dating back almost 10 years. Seven mobile insurance services that were launched
have since either closed or merged, indicating that it has taken some time to get the commercial and partnership model right. it is there-
fore critical for deployments to have an exit strategy in the event they can no longer ofer the service. this will help protect the brands of
both the mnO and the insurance company ofering the service as they will continue to trade independently of each other after a closure.

Despite these false starts, there is still strong interest in exploring the mobile insurance opportunity. the mmu deployment tracker
reveals 84 live services, 16 of which launched in 2013. in addition, 8 survey respondents reported they were planning to launch mobile in-
surance in the next twelve months. the regions where mobile insurance has been most popular (in terms of number of policies initiated)
are Sub-Saharan africa and South asia.

the mobile insurance product ofering

Over three quarters (76%) of mobile insurance services in our sample ofer life cover, while the other 24% provide health insurance,
accident coverage, or agricultural insurance. life insurance requires simpler sales and claims administration processes relative to other
insurance products, making it simpler to enable via mobile.

With a view to simplify non-life products, some mobile insurance providers are innovating in the use of data collection to automatically
pay out claims via mobile money. For example, Killimo Salma, a micro-insurance program for farmers in Kenya, has developed a system
whereby they pay out based on weather conditions and the data they collect from specially set-up weather centres, proving that a
service that is automated and can be verifed using low-cost technology is likely to have quick market uptake.

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